How UK Umbrella Companies Can Help You Weather The Financial Crisis In Europe.

With numerous financial crises occurring around the world, 2012 has proven to be a year of intense market volatility.

Although much attention has been given to the insolvent economies of southern European countries, most in the UK will firmly agree that the domestic market has been less than favourable.

This fluctuation has found its way down to domestic businesses and UK contractors which is of particular concern.

Initially, we must examine in general what the budget predictions are for the upcoming year and subsequently, why UK contractors need to be aware of the options which they may use to their benefit in these difficult times.

In March of this year, Chancellor George Osborne delivered his budget predictions.  In the coming months ahead, borrowing alone will equate to 91 billion pounds; 46 billion pounds diverted back into debt interest alone.  This will inherently cause prices to rise and more importantly, due to income tax changes, earners in the low 40,000 pound category will find themselves placed into a higher tax bracket.  Many contractors may suddenly be presented with no other option than to abide by this new legislation, especially if they are a limited company.  If we combine these circumstances with the all-too-obvious economic downturn which the UK has experienced in the last 5 years, many contractors’ businesses could find themselves under further financial strain.

However, it also needs to be stated that business sentiment amongst small and middle-sized manufacturers has risen for the first time since 2011, with many contractors saying that they are more optimistic about their financial futures than they had been three months prior.  Most have seen small to moderate gains in new orders and revenue generated and the majority anticipate hiring additional employees in the months ahead.

While this data represents a mixed outlook for the coming year, depending on the current financial bracket and solvency of a contractor’s company, he may find himself in the position to incorporate different strategies in regards to management, oversight, and revenue allocation.  If one takes nothing else from this rather general and changeable outlook which may be additionally determined by economic factors abroad, he should realise that although sentiment has increased, difficult times still lay ahead.  This is the primary reason why we have seen such a prominence of UK contractors choosing umbrella services to take some of the fiscal burden off of their enterprises.

By definition, umbrella companies possess the ability to successfully manage the fiscal end of a contractor’s operations, such as VAT obligations, changing taxation policies, accountancy, and payroll.  With contractors having to place their focus on generating revenue, especially when speaking of this perceived increased positive sentiment, the more time they should devote directly to day to day operations, thereby increasing chances of success in the months ahead.

It should therefore be expected that more contractors will turn to umbrella services in the coming months and years to follow.  Nevertheless, with increased interest in these companies and more of them conducting business, one must be careful to choose wisely who he wishes to work with.  Although reputation, experience, and cost are all important factors, the contractor needs to align himself with a provider that understands these times of economic fluidity and is fully abreast of the changing policies which will continue to be enacted this year.

David webster is a trainee accountant who has been interested since he was bought some shares as a kid. He now follows all things financial and trades forex for fun.